REG - Scotgold Resources - Interim Results
30/03/2023 07:00
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RNS Number : 6938U Scotgold Resources Ltd 30 March 2023
30 March 2023
Scotgold Resources Limited ("Scotgold" or the "Company")
Interim Results
Scotgold Resources Limited (AIM: SGZ), Scotland's first commercial gold
producer, announces its Interim Results for the six months ended 31 December
2022 ('H1 2023').
Operational Overview
· Production for six months ended 31 December 2022, totalled 3,809
ounces of gold
· H1 2023 gold concentrate sales totalled £5.4m (A$9.5m) from 550
tonnes of concentrate shipments to our off-take partner
· First Scottish gold doré sales were made to Scottish jewellery
companies in December 2022 totalling £25,420
Financials
· Total revenues of A$9.5m in H1 2023 (H1 2022: A$6.4m)
· Loss before taxation in H1 2023 of A$9.5m (H1 2022: A$5.3m)
· Cash at 31 December 2022 of A$67k (30 June 2022: A$168k)
· Net debt of A$25.0m at 31 December 2022
Chairman Statement
The period under review, whilst challenging, has seen progress and important
milestones being achieved at our Cononish gold mine, in Tyndrum, Scotland
('Cononish'), as we continue to develop Scotland's first commercial gold mine
towards full production, producing both gold concentrate for off-take and
Scottish gold doré for the jewellery industry.
During H1 2023 (1 July to 31 December 2022) we implemented initiatives for the
underground mining operation and processing plant to enable our operation to
run more efficiently. Power and ventilation upgrades in the underground mine
and de-bottlenecking of the process plant (floatation and tailings filtration)
were completed as well as mine development in the underground mine, to allow
three development drives, allowing the Company to drive to the first stope
mining area initially planned for calendar Q2 2023, as well as inclining to
the 445 level to open even further development drives in late 2023.
Additionally, limited resource definition and grade control drilling commenced
October 2022, providing essential information for the correct design and shape
of stopes, with the aim of higher certainty in grade prediction for the 2023
mine plan, when mining transitions from development tunnelling to long hole
stoping.
Production for the three months ended 31 September 2022, totalled 2,004 ounces
of gold, however this was lower than the 2,600 to 3,200 ounces targeted for
the quarter, as a result of the successful, but delayed power and ventilation
upgrades in the underground mine, which stalled mine development on the waste
ramp in September 2022.
During the three months to 31 December 2022, operational difficulties
continued in the underground mine. December 2022 was impacted by changes in
the short-term mine schedule to expedite continuous long hole stoping in the
western areas of the mine in 2023, as reported on 21 December 2022, and
harsher than expected weather conditions. Production totalled 1,805 ounces
(previously forecasted 3,000-3,500 ounces of gold) and an additional 324
ounces was mined in December but stored underground as weather conditions
didn't allow for the mining trucks to move the ore to the ROM pad safely. This
ore was then processed at the beginning of January 2023.
Gold concentrate sales for the period totalled £5.4m (A$9.5m) from 550 tonnes
of concentrate shipments to our off-take partner.
Additionally, first Scottish gold doré sales were made to Scottish jewellery
companies in December 2022 totalling £25,420 and sales continue post-period
end with Scottish gold jewellery launches planned in 2023.
Post-period mine development
As reported on the 19 January 2023, in our 2023 mine plan and strategy update,
whilst the majority of capital project works completed in H1 2023 focussed on
increasing the mine production rate, mine production would still be the
limiting factor for gold production, until long hole stoping commenced,
forecasted at this stage for calendar Q2 2023.
Post-period end, in January 2023, mine development focussed on the 430 West
ore drive, 415 East ore drive and the incline ramp accessing the 445 level and
achieved record development rates with 3,003 tonnes of ore mined, and 2,620
tonnes of ore fed to the process plant. However, average grade of the ore
processed was lower than predicted (5.65g/t actual vs 7.35g/t planned of
gold).
In February 2023, development on the 430 West ore drive continued. However, as
the 430 West ore drive progressed in late February and into early March 2023,
gold grades began to decline significantly, and the 430 West ore drive turned
to waste, contradicting the grade control model. Total ore production in
February was negatively impacted, with actual 977 tonnes mined and 1,441
tonnes processed.
As a result of the 430 West ore drive turning to waste and the need to focus
on ore production, the Company shifted development priorities on 3 March 2023
to the 415 East ore drive. In parallel, plans commenced to bring forward long
hole stoping to early April (instead of previously forecasted for calendar Q2
2023), to secure the short to medium term production profile and enhance gold
production thereafter. Stope drilling continues to be undertaken successfully
and the transition to Long hole stope mining is on track to commence in 5 days
time.
Financial Position
Post-period end, on 9 February 2023, the Company undertook an equity fundraise
to provide funds to support the planned transition from tunnel development
mining to long hole stoping. 7,428,460 new Ordinary Shares totalling gross
proceeds of £3.0m (US$3.6m) at a price of 40p per share were issued after a
Placing, Subscription and Retail Offer. Seven Directors of Scotgold and a
significant shareholder participated in the Subscription for a total of
1,435,000 Subscription Shares with a total value of £574,000 (US$700,280).
Further to the Capital Raising, Bridge Barn Limited, a company owned and
controlled by Mr Nathaniel le Roux and provider of debt funding to the
Company, has agreed the option to defer a total of £2.5m capital repayments
due by the Company in calendar year 2023 by up to 9 months from the due date.
As reported on 27 March 2023, the Company's mine plan anticipated that 5,818
tonnes of mineralised ore would be mined in February and March 2023 ahead of
the transition to long-hole stoping in Q2 2023. Actual tonnes mined are now
expected to be between 550 and 600 in March and about 3,000 tonnes of waste to
place into required areas for commencement of stope drilling.
The Company's management team continuously assess the cash position of the
Company. As a result of recent mining performance being below plan, largely
due to lower than expected grades in the 430 West ore drive resulting in the
subsequent decision to bring forward long hole stope mining, the Directors now
believe that, in the event that the planned commencement of long hole stoping
in April is delayed, or the anticipated tonnes of ore mined in April and the
following months is significantly below the current mine plan, then a material
uncertainty would exist that casts significant doubt over the ability of the
consolidated entity to continue as a going concern in the very immediate term
and therefore its ability to realise its assets and discharge its liabilities
in the normal course of business.
In order to safeguard against this potential shortfall in working capital over
the next few months the Directors have determined to take steps to strengthen
the Company's cash position. The Company is in advanced discussions with its
gold offtake partner, and is reviewing final documentation, to secure a
US$500,000 advance to assist with short-term working capital. The Directors of
the Company have also discussed, if the need arises, the provision of
additional working capital, in the form of equity or a short-term convertible
loan.
The ability of the consolidated entity to continue as a going concern over the
long term will remain dependent on the quantity and grade of ore mined and
processed being within a reasonable tolerance of the forecast quantity and
grade and adherence to the planned product shipment schedule.
Our people and commitment to sustainability
We are supported and driven by our team. We currently have 96 employees and
continually invest in our people. In this regard, we were pleased to report
that we have been working with Forth Valley College in Falkirk on
apprenticeship schemes where we currently have placed students in mechanical
engineering roles. In addition, in July 2022, we launched a partnership with
the University of St Andrews for a five-year student bursary programme. Our
team is working closely with the University teaching staff and students on the
MSc Strategic Resources course involving work at both the University and at
our Cononish site.
We are committed to the principles of sustainable and responsible mining in
all aspects of our business. We are dedicated to the safety of our workforce
and local communities. To that end, we are proud of our no cyanide status, as
one of the only gold producers globally that does not use it in our
processing. We also utilise dry stack tailings to ensure safety and a
minimal environmental footprint. The Company can also confirm that there have
been no serious health and safety incidents this year. We work in accordance
to the UK's HSC best practice and have a zero-harm safety culture focused on
continuous improvement to achieve an injury free and healthy work environment.
We also support work of Loch Lomond and The Trossachs National Park and
contribute to the Strathfillan Development Trust, which is a local charity
representing the residents of Tyndrum, Crianlarich and Inverarnan.
Finally, I would like to extend my appreciation to our colleagues here in
Scotland who have worked with dedication during very challenging times. I
would also like to extend my gratitude to all our stakeholders for their
continued support and as we continue to develop the mine during this critical
time, we will update on developments and progress in this regard.
Chairman
Peter Hetherington
29 March 2023
The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU No. 596/2014) (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.
For further information please visit www.scotgoldresources.com
(http://www.scotgoldresources.com) or contact the following:
Scotgold Resources Limited Shore Capital Celicourt Communications
Chief Executive Officer Nomad and Broker Financial PR
Phil Day Toby Gibbs / John More Felicity Winkles/Ariana Fanning
CFO
Sean Duffy
Via Celicourt Communications Tel +44 (0) 20 7408 4090 Tel +44 (0) 208 434 2643
Tel +44 (0) 774 8843 871
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE HALF YEAR ENDED 31 DECEMBER
2022
Notes 31 December 2022 31 December 2021
$ $
Gold Concentrate Sales 2 9,488,508 6,431,437
Production Costs (11,896,042) (6,431,437)
Sale of scrap metal - 2,411
Net (loss) / profit from operations (2,407,534) 2,411
Interest income 7,930 1,816
Loss on settlement of loan 3 - (1,359,008)
Administration costs (1,107,011) (694,442)
Interest expense 4 (1,010,577) (808,668)
Depreciation and amortisation of plant and equipment and Right of Use assets 6,7 (1,465,587) (1,403,670)
Depreciation of mining development asset 9 (1,734,676) -
Employee and consultant costs, excluding share-based payments (1,104,391) (842,503)
Share-based payments 13 (111,269) (153,468)
Other expenses - (218,557)
Currency exchange expense (537,935) (96,883)
LOSS BEFORE INCOME TAX (9,471,050) (5,572,972)
Income tax benefit - -
LOSS FOR THE PERIOD (9,471,050) (5,572,972)
Other Comprehensive Income
Items that may be reclassified to Profit or Loss
Exchange difference on translation of foreign subsidiaries 50,630 281,768
Total comprehensive result for the period (9,420,420) (5,291,204)
Basic and diluted (loss) per share (cents per share) (14.89) (9.62)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022
Notes 31 December 2022 30 June
2022
$ $
CURRENT ASSETS
Cash and cash equivalents 67,098 168,086
Trade and other receivables 5 1,026,445 4,686,404
Inventories 887,104 1,295,839
Other current assets 282,536 1,048,210
Total Current Assets 2,263,183 7,198,539
NON-CURRENT ASSETS
Trade and other receivables 5 1,471,832 1,463,125
Plant and equipment 6 14,449,238 14,515,295
Right of use assets 7 2,750,647 3,025,490
Mineral exploration and evaluation 8 3,209,042 3,051,622
Mine development expenditure 9 22,428,489 23,996,356
Total Non-Current Assets 44,309,248 46,051,888
TOTAL ASSETS 46,572,431 53,250,427
CURRENT LIABILITIES
Trade and other payables 4,601,880 3,999,379
Other current liabilities 1,481,721 1,100,811
Borrowings 10 859,446 1,175,358
Total Current Liabilities 6,943,047 6,275,548
NON-CURRENT LIABILITIES
Borrowings 10 24,204,192 22,266,513
Provisions 11 727,327 781,898
Total Non-Current Liabilities 24,931,519 23,048,411
TOTAL LIABILITIES 31,874,566 29,323,959
NET ASSETS 14,697,865 23,926,468
EQUITY
Issued capital 12 57,835,768 57,755,221
Reserves 1,592,517 1,430,619
Accumulated losses (44,730,421) (35,259,372)
TOTAL EQUITY 14,697,865 23,926,468
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF YEAR ENDED 31 DECEMBER 2022
Issued Capital Accumulated Losses Options Reserve Share-based payment reserve Foreign Currency Translation Reserve Total Equity
$ $ $ $ $ $
HALF YEAR TO 31 DECEMBER 2021
Balances at 1 July 2021 52,640,345 (24,474,388) 134,769 900,806 (249,608) 28,951,924
Total comprehensive result for the period - (5,572,972) - - 281,768 (5,291,204)
Transactions with owners in their capacity as owners:
Issue of shares 5,114,876 - - - - 5,114,876
Share-based payments - - - 153,468 - 153,468
Balances at 31 December 2021 57,755,221 (30,047,360) 134,769 1,054,274 32,160 28,929,064
HALF YEAR TO 31 DECEMBER 2022
Balances at 1 July 2022 57,755,221 (35,259,372) 134,769 1,169,443 126,407 23,926,468
Total comprehensive result for the period - (9,471,050) - 111,269 50,631 (9,309,150)
Issue of shares 80,547 - - - - 80,547
Balances at 31 December 2022 57,835,768 (44,730,422) 134,769 1,280,712 177,038 14,697,865
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF YEAR ENDED 31 DECEMBER 2022
31 December 31 December
2022 2021
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 13,078,275 5,976,072
Payments to suppliers (13,283,761) (7,635,639)
Interest income received 7,930 1,816
Net Cash outflow from Operating Activities (197,556) (1,657,751)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration expenditure - (92,229)
Purchase of plant and equipment (701,677) (382,544)
Net Cash Outflow from Investing Activities (701,677) (474,773)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares and options 82,569 -
Proceeds from short term unsecured loan 1,440,367 1,883,594
Repayment of lease liabilities (712,950) (1,422,739)
Net Cash Inflow from Financing Activities 809,986 460,855
Net (decrease) in cash held (89,247) (1,671,669)
Effect of exchange rate fluctuations on cash and cash equivalents (11,741) 10,498
Cash and cash equivalents at the beginning of the period 168,086 2,624,342
Cash and cash equivalents at the end of the period 67,098 963,171
NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
These consolidated financial statements for the interim half-year reporting
period ended 31 December 2022 are general purpose financial statements, which
have been prepared in accordance with the requirements of the Corporations Act
2001, Accounting Standards and Interpretations, including AASB 134 'Interim
Financial Reporting', and other applicable requirements of the law. The
condensed consolidated interim financial statements have been prepared in
accordance with the AIM rules. The six months results for 31 December 2022
have not been audited nor reviewed pursuant to statutory requirements in both
the United Kingdom and Australia.
These financial statements have been prepared on a historical cost basis and
are presented in Australian dollars. These general-purpose financial
statements do not include all the notes of the type normally included in
annual financial statements. Accordingly, these financial statements are to be
read in conjunction with the annual report for the year ended 30 June 2022 and
any public announcements made by the Company during the interim reporting
period.
The Company is a listed public company, incorporated in Australia and
operating in Scotland. The entity's principal activity is mine development
and mineral exploration. These financial statements are for the consolidated
entity consisting of Scotgold Resources Limited and its controlled entities.
The accounting policies adopted are consistent with those of the previous
financial year and the corresponding interim period, except for the policies
stated below.
Revenue from sale of goods
Revenue from the sale of goods is recognised when control of the goods has
passed to the buyer based upon agreed delivery terms.
Sale of concentrates
Revenue from the sale of concentrates is recognised when control has passed to
the buyer based upon agreed delivery terms, generally being when the product
is loaded onto the ship and bill of lading received, or delivered to the
customer's premises. In cases where control of the product is transferred to
the customer before shipping takes place, revenue is recognised when the
customer has formally acknowledged their legal ownership of the product, which
includes all inherent risks associated with control of the product. In these
cases, the product is clearly identified and immediately available to the
customer and this is when the performance obligation is met.
The price to be received on sales of concentrate is provisionally priced and
recognised at the estimate of the consideration receivable that is highly
probable of not reversing by reference to the relevant contractual price and
the estimated mineral specifications, net of treatment and refining charges
where applicable. Subsequently, provisionally priced sales are repriced at
each reporting period up until when final pricing and settlement is confirmed,
with revenue adjustments relating to the quality and quantity of commodities
sold being recognised in sales revenue.
Provisionally priced sales for which price finalisation is referenced to the
relevant metal price index have an embedded commodity derivative. The embedded
derivative is carried at fair value through profit or loss as part of trade
receivables.
The period between provisional pricing and final invoices is generally 120
days.
Provisional pricing adjustments
The Group's sales contracts may provide for provisional pricing of sales at
the time the product is delivered to the vessel with final pricing determined
using the index on or after the vessel's arrival to the port of discharge.
This provisional pricing relates to the quality and quantity of the commodity
sold, which is included in sales revenue, and an embedded derivative relating
to the pricing of the commodity sold. Provisional pricing adjustments relating
to the embedded derivative are separately identified as movements in the
financial instrument rather than being included within Sales revenue. The
final pricing adjustment mechanism, being an embedded derivative, is separated
from the host contract and recognised at fair value through profit or loss.
These amounts are disclosed separately as Provisional pricing adjustments in
Other revenue, rather than being included within Sales revenue for the Group.
Going
Concern
For the period ended 31 December 2022 the Group recorded a loss of $9.5m
(2021: $5.6m) and had a working capital deficiency of $4.8m (2021: $13.0m).
The Group recorded net operating cash outflows of $0.1m for the financial
period (2022: $1.7m).
These conditions indicate a material uncertainty that may cast significant
doubt over the ability of the consolidated entity to continue as a going
concern and therefore its ability to realise its assets and discharge its
liabilities in the normal course of business.
The ability of the consolidated entity to continue as a going concern is
dependent on the quantity and grade of ore mined and processed matching the
forecast quantity and grade and adherence to the planned product shipment
schedule.
The Group also recognises the inherent operational risks (such as mining fleet
availability, processing plant recovery and environmental accidents and
disputes) and macro-economic factors (such as the gold price and foreign
exchange movements) which could further impact the Group's ability to continue
as a going concern.
The financial statements have been prepared on the basis that the Company is a
going concern, which contemplates the continuity of normal business activity,
realisation of assets and settlement of liabilities in the normal course of
business.
Directors believe that there will be sufficient funds available to continue to
meet the Group's working capital requirements as at the date of this report
and that sufficient funds will be available to finance the operations of the
Group for the following reasons:
· Since the period end, the Group has issued a further 7,428,460
new Ordinary Shares worth £3.0m.
· Agreed the option to defer a total of £2.5 million capital
repayments due by the Company in calendar year 2023 to Bridge Barn Limited by
up to 9 months from the due date.
· The Company is in advanced discussions with its gold offtake
partner, and is reviewing final documentation, to secure a US$500,000 advance
to assist with short-term working capital. The Directors of the Company have
also discussed, if the need arises, the provision of additional working
capital, in the form of equity or a short-term convertible loan.
Accordingly, the Directors believe that the consolidated entity has access to
sufficient financing to be able to continue as a going concern.
Should the consolidated entity not be able to continue as a going concern it
may be required to realise its assets and discharge its liabilities other than
in the ordinary course of business, and at amounts that differ from those in
the financial statements. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
asset amounts or liabilities that might be necessary should the consolidated
entity be unable to continue as a going concern.
Statement of Compliance
The financial report was authorised for issue on 29 March 2023.
The financial report complies with Australian Accounting Standards as issued
by the Australian Accounting Standards Board and International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards
Board.
New or amended standards adopted by the entity
The consolidated entity has adopted all of the new or amended Accounting
Standards and Interpretations issued by the Australian Accounting Standards
Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet
mandatory have not been early adopted.
Key estimates and judgements
Judgement is exercised in estimating variable consideration. This is
determined by past experience with respect to the final selling price received
on the assay results as taken at the goods final destination.
Revenue will only be recognised to the extent that it is highly probable that
a significant reversal in the amount of cumulative revenue recognised under
the contract will not occur when the uncertainty associated with the variable
consideration is subsequently resolved.
NOTE 2 - GOLD CONCENTRATE SALES
Six months to
31 December 31 December
2022 2021
$ $
From continuing operations
Sales revenue from contracts with customers
Production and sale of gold concentrate 9,488,508 6,431,437
Sales revenue 9,488,508 6,431,437
NOTE 3 - LOSS ON SETTLEMENT OF LOAN
On 4 May 2021, four directors and one material shareholder who is not a
director (collectively "the Loan Providers"), made available to SGZ Cononish
Limited an unsecured, interest-free, short-term loan facility of £ 2,000,000,
with the due date for repayment thereof being 4 November 2021. The loan
facility was drawn down by SGZ Cononish Limited in two tranches of £
1,000,000 each on 12 May 2021 and 6 August 2021 respectively.
On 27 September 2021, the loan was settled by Scotgold Resources Limited on
behalf of SGZ Cononish Limited by the issuing by Scotgold Resources Limited of
3,301,420 shares to the Loan Providers (these shares being referred to
hereinafter as "the Settlement Shares") at a price of 60.58p. This was deemed
a non-cash financing activity.
NOTE 4 - INTEREST EXPENSE
Six months to
31 December 31 December
2022 2021
$ $
Interest expense is attributable to the following:
Secured loan (see Note 10) 844,688 648,450
Lease liabilities (see Note 10) 112,781 153,343
Unwinding of discount on provision for restoration and decommissioning 53,108 6,875
(see Note 11)
Total interest cost expensed 1,010,577 808,668
NOTE 5 - TRADE AND OTHER RECEIVABLES
Current trade and other receivables comprise the following:
31 December 2022 30 June 2022
$ $
Trade debtors 414,973 4,008,959
GST/VAT receivable 329,178 436,108
Other receivables 282,294 241,337
1,026,445 4,686,404
Non-current trade and other receivables comprise the following:
31 December 2022 30 June 2022
$ $
Rehabilitation, restoration and land management Bond deposits 1,471,832 1,463,125
1,471,832 1,463,125
NOTE 6 - PLANT AND EQUIPMENT
Plant and equipment 31 December 2022 30 June 2022
$ $
Cost 17,384,651 16,634,431
Accumulated depreciation (2,935,413) (2,119,136)
14,449,238 14,515,295
Movement for the six months ended 31 December 2022
Plant and equipment Motor vehicles Furniture and office equipment Total
Cost
Opening balance 16,390,899 56,179 187,353 16,634,431
Additions 679,742 - - 679,742
Disposals - - - -
Foreign exchange movement 72,826 253 (2,601) 70,478
Closing balance 17,143,467 56,432 184,752 17,384,651
Accumulated depreciation
Opening balance 2,015,532 37,112 66,492 2,119,136
Depreciation expensed 802,466 2,024 21,328 825,818
Foreign Exchange (4,115) 3,262 (8,688) (9,541)
Closing balance 2,813,883 42,398 79,132 2,935,413
Movement for the year ended 30 June 2022 Plant and equipment Motor vehicles Furniture and office equipment Total
Cost
Opening balance 16,686,237 58,522 80,846 16,825,605
Additions 385,540 - 114,042 499,582
Foreign exchange movement (680,878) (2,343) (7,535) (690,756)
Closing balance 16,390,899 56,179 187,353 16,634,431
Accumulated depreciation
Opening balance 489,900 33,117 21,658 544,675
Depreciation expensed 1,605,064 5,529 47,148 1,657,741
Foreign exchange movement (79,432) (1,534) (2,314) (83,280)
Closing balance 2,015,532 37,112 66,492 2,119,136
Net carrying value
At 30 June 2022 14,375,367 19,067 120,861 14,515,295
At 30 June 2021 16,196,337 25,405 59,188 16,280,930
NOTE 7 - RIGHT-OF-USE ASSETS
31 December 30 June
2022 2022
$ $
Cost 6,060,186 6,859,368
Accumulated Depreciation (3,309,539) (3,833,878)
2,750,647 3,025,490
The movements in Right-of-use assets are as follows:
Six months to 31 December Year ended 30 June
2022 2022
$ $
Cost
Opening balance 6,859,368 4,601,501
Additions 355,385 1,566,768
Modifications of rights - 977,541
Foreign exchange movement (1,154,567) (286,442)
Closing balance 6,060,186 6,859,368
Accumulated Depreciation
Opening balance 3,833,878 1,823,539
Depreciation expensed 623,171 1,954,136
Foreign exchange movement (1,147,510) 56,203
Closing balance 3,309,539 3,833,878
NOTE 8 - MINERAL EXPLORATION AND EVALUATION
Six months to Year to
31 December 30 June
2022 2022
$ $
Opening balance 3,051,622 2,990,000
Additional expenditure capitalised during the period - 185,422
Foreign exchange movement 157,420 (123,800)
Closing balance 3,209,042 3,051,622
The ultimate recoupment of exploration expenditure carried forward is
dependent upon successful development and commercial exploitation, or sale of
the respective areas.
As at 31 December 2022, management have not identified any indicators of
impairment in respect of this asset.
NOTE 9 - MINE DEVELOPMENT EXPENDITURE
Six months to Year to
31 December 30 June
2022 2022
$ $
Opening balance 23,996,356 25,770,548
Additions - 935,058
Movement in Provision for restoration and decommissioning - 121,030
(see Note 11)
Amortisation (1,734,676) -
Transfer to plant and equipment - (2,247,870)
Transfer to production costs - (582,410)
Foreign exchange movement 166,809 -
Closing balance 22,428,489 23,996,356
As at 31 December 2022, management have not identified any indicators of
impairment in respect of the mine development asset.
NOTE 10 - BORROWINGS
31 December 30 June
2022 2022
Non-current $ $
Secured loan facility 16,716,174 16,146,988
Unsecured loan facility 6,167,111 4,548,865
Right-of-use lease liabilities 1,320,907 1,570,660
24,204,192 22,266,513
31 December 30 June
2022 2022
Current $ $
Right-of-use lease liabilities 859,446 1,175,358
859,446 1,175,358
Total borrowings 25,063,638 23,441,871
All of the borrowings are denominated in £ (Pounds sterling).
Loan from company controlled by shareholder
There have been no material changes or variations 'to the terms of the secured
loan facility other than those listed in the subsequent events section in the
Directors' report.
The secured loan is in good standing at the reporting date.
Movements on the secured facility loan for the six months ended 31 December
2022:
Third Tranche Fourth Tranche Fifth Tranche Sixth Tranche Seventh Tranche Eight Tranche Total
$ $ $ $ $ $ $
Balance at beginning of period 1,037,797 2,060,388 2,051,698 989,012 980,990 9,027,103 16,146,988
Interest at effective rate 42,269 84,539 84,539 39,032 39,032 394,391 683,802
Interest Payment (13,409) (26,817) (26,817) (12,382) (12,383) (125,107) (216,915)
Foreign exchange movement 6,560 13,028 12,977 6,240 6,193 57,301 102,299
Balance at end of period 1,073,217 2,131,138 2,122,397 1,021,902 1,013,832 9,353,688 16,716,174
The effective interest rate on the secured loan facility is 8.38% (Year ended
30 June 2022 - 8.38%) per annum.
Lease liabilities
The movements in lease liabilities are as follows:
Six months to Year to
31 December 30 June
2022 2022
$ $
Opening balance 2,746,017 2,660,513
Additional rights acquired 393,987 1,801,023
Modifications to rights - 883,049
Interest expense 112,781 295,033
Repayments (712,950) (2,775,775)
Foreign exchange movement (359,482) (117,826)
Balance at end of period 2,180,353 2,746,017
Non-current portion 1,320,907 1,570,659
Current portion 859,446 1,175,358
The effective interest rate on the lease liabilities is 7.44% (year ended 30
June 2022 - 7.44%) per annum. Right-of-use assets with an aggregate net
carrying value of $2,750,647 (30 June 2022 - $3,025,490) are financed by the
lease liabilities.
NOTE 11 - PROVISIONS
31 December 30 June
2022 2022
$ $
Provision for restoration and decommissioning 727,327 781,898
This provision represents the best estimate of the present value of
expenditures required to effect restoration of the Cononish mine area at the
end of mining operations at the mine as well as to carry out aftercare and
monitoring activities in terms of the Decommissioning and Restoration Plan
formulated in accordance with the requirements set out in the Section 75
Agreement entered into by SGZ Cononish Limited on 12 September 2018, based on
the mine development activities carried out up to and including 31 December
2022.
In arriving at the amount of the provision, an annual inflation rate of 2.0%
has been applied to estimated future costs stated at current levels and the
resultant cashflows have been discounted back to 31 December 2022 using a
discount rate of 0.98%.
The movements in the provision are as follows:
Six months to Year to
31 December 30 June
2022 2022
$ $
Opening balance 781,898 908,915
Unwinding of discount (108,074) (1,470)
Adjustment for mine development progress and change in rate 55,102 (119,560)
Foreign exchange movement (1,599) (5,987)
Closing balance 727,327 781,898
NOTE 12 - ISSUED CAPITAL
31 December 30 June 31 December 30 June
2022 2022 2022 2022
No. of shares No. of shares $ $
Ordinary shares - fully paid 59,673,291 59,523,291 57,835,768 57,755,221
(a) Movements in ordinary share capital
During the six months ended 31 December 2022
Date Details Shares Value $
(cents)
Balance at the beginning of the period 59,523,291 57,755,221
19/12/2022 Exercise of options 150,000 0.54 80,547
Balance at 31 December 2022 59,673,291 57,835,768
During the year ended 30 June 2022
Date Details Shares Value $
(cents)
Balance at 30 June 2021 56,221,871 52,640,345
24/09/2021 Conversion of Directors' Loan 3,301,420 1.549 5,114,876
Balance at 30 June 2022 59,523,291 57,755,221
(b) Movements in options
On 19 December 2022, 150,000 options were exercised at an option price of 30p.
Otherwise, there have been no movements in options since the prior reporting
year ended 30 June 2022, other than the share-based payment changes disclosed
in Note 13.
The options outstanding at 31 December 2022, excluding options issued to key
management and senior managers as share-based payment, are as follows:
Number Exercise Price Expiry Date Option Reserve
$
30,000 $8.00 31 March 2022 134,769
Details of options issued to key management and senior managers are set out in
Note 12.
NOTE 13 - SHARE-BASED PAYMENTS
The rules of the Enterprise Management Incentive Scheme of the Company provide
that the Board may at its discretion grant Enterprise Management Incentive
Scheme options to employees of the Company and its controlled entities to
acquire ordinary shares in the Company at such exercise price and in such
numbers as it considers appropriate and to attach such performance conditions
to the vesting of such options as it considers appropriate, subject to
compliance with the provisions of Schedule 5 of the United Kingdom Income Tax
(Earnings and Pensions) Act 2003 and other applicable legislation.
No new options were granted or cancelled in the period.
Charges in respect of share-based payment have been recognised as
follows:
Charged to profit or loss Charged to mine development Increase in share-based payment reserve
$ $ $
Cumulative to 30 June 2021 631,873 268,933 900,806
During year ended 30 June 2022 268,637 - 268,637
Cumulative to 30 June 2022 900,510 268,933 1,169,443
During period ended 31 December 2022 111,269 - 111,269
Cumulative to 31 December 2022 1,011,779 268,933 1,280,712
NOTE 14 - RELATED PARTIES
Basic remuneration of £177,375 per annum is payable in terms of the service
agreement and Mr Phillip Day shall be eligible to join the Group pension fund.
The annual leave entitlement of Mr Phillip Day amounts to 18.75 days plus a
pro rata number of public holidays in Scotland. The service agreement further
provides that Mr Phillip Day shall be reimbursed for the reasonable cost of
necessary travel incurred in connection with visits to the operations of the
Group in Scotland, including flights to and from Switzerland and car hire in
the United Kingdom, and that the Group shall provide accommodation to Mr
Phillip Day while he is visiting the operations.
The agreement for the rendering of consultancy services with PAW Consulting
Services GmbH provides for a consultancy service fee of £4,479 per month,
excluding VAT, to be payable net of any amounts in respect of income tax and
national insurance contributions required to be deducted by law. In addition,
the Group shall reimburse all reasonable expenses incurred by PAW Consulting
Services GmbH in rendering the consultancy services.
Sean Duffy is remunerated in terms of a contract of employment which provides
for a fixed salary of £155,000 per annum, as well as an annual leave
entitlement of 18.75 days plus a pro rata number of public holidays in
Scotland and eligibility to join the Group pension fund.
Each of the Directors is a related party.
Mr Richard Barker provides the services of Company Secretary through his
service company Barston Corporation Pty Ltd. The services as Company Secretary
provided by Mr Barker are charged at commercial, arm's length rates.
NOTE 15 - COMMITMENTS FOR EXPENDITURE
Amounts payable to Loch Lomond and the Trossachs Countryside Trust
The following amounts are payable to the Loch Lomond and the Trossachs
Countryside Trust in terms of Clause 18 of the Section 75 Agreement entered
into with the owner of the land on which the Cononish mine is situated, the
Loch Lomond and the Trossachs National Park Authority and the Crown Estate
Scotland in respect of the development of the Cononish mine:
$
Not later than one year 88,810
Later than 1 year but not later than 2 years 88,810
Later than 2 years but not later than 5 years 266,430
Later than 5 years 88,810
532,860
Other than the commitments disclosed above, there have been no material
changes during the period to the commitments disclosed in the annual report
for the period ended 31 December 2022.
NOTE 16 - CONTINGENT LIABILITIES
There have been no material changes during the period to the contingent
liabilities disclosed in the annual report for the year ended 30 June 2022.
NOTE 17 - SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The chief
operating decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the
Board of Directors of Scotgold Resources Limited.
The comparative information disclosed is for the period ended 31 December 2021
in the case of segment loss, interest expense and depreciation and for the
year ended 30 June 2022 in the case of balances of and movements in segment
assets and liabilities.
Six months ended 31 December 2022
Scotland Scotland Australia Other Total
Mining Exploration
$ $ $ $ $
Segment income 9,484,289 - - - 9,484,289
Segment loss (7,470,977) - (1,888,804) - (9,359,781)
Segment assets 2,047,791 107,561 106,739 1,151 2,263,242
Segment non-current assets 42,562,214 3,209,040 272,670 - 46,043,924
Segment liabilities (30,618,758) (226,091) (227,795) (9,746) (31,082,390)
Segment non-current liabilities (792,176) - - - (792,176)
Included in segment result:
Interest expense 1,010,577 - - - 1,010,577
Depreciation 3,200,264 - - - 3,200,264
Comparative figures
Scotland Scotland Australia Other Total
For the six months ended 31 December 2021: Mining Exploration
$ $ $ $ $
Segment other income 6,431,437 33 6,431,470
Segment loss 5,171,720 6,315 394,937 - 5,572,972
As at 30 June 2022:
Segment assets 6,999,511 91,226 106,739 1,063 7,198,539
Segment non-current assets 42,727,597 3,051,622 272,669 - 46,051,888
Segment liabilities (5,855,231) 182,854 227,795 9,668 (6,275,548)
Segment non-current liabilities (23,044,179) (4,232) - - (23,048,411)
Included in segment result for the six months ended 31 December 2021:
Interest expense 808,213 455 - - 808,668
Depreciation 1,399,608 4,062 - - 1,403,670
NOTE 18 - MATTERS SUBSEQUENT TO THE END OF PERIOD
On 16 January, the Group issued 7,428,460 new Ordinary Shares totalling gross
proceeds of £3.0 million (US$3.6 million) at a price of 40p per share, These
shares were issued after the successful equity Placing, Subscription and
Retail Offer.
Seven Directors of Scotgold and a significant shareholder participated in the
Subscription for a total of 1,435,000 Subscription Shares with a total value
of £574,000 (US$700,280).
Further to the Capital Raising, Bridge Barn Limited, a company owned and
controlled by Mr Nathaniel le Roux and provider of debt funding to the
Company, has agreed the option to defer a total of £2.5 million capital
repayments due by the Company in calendar year 2023 by up to 9 months from the
due date.
Apart from the above, no other matter or circumstance has arisen since 31
December 2022 that has significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations, or the
consolidated entity's state of affairs in future financial periods.
DIRECTORS OPINION
1. In the opinion of the Directors of Scotgold Resources Limited (the
'Company'):
a. the accompanying financial statements and notes are in accordance with
the Corporations Act 2001 including:
i. giving a true and fair view of the consolidated entity's financial position
as at 31 December 2022 and of its performance for the half-year then ended;
and
ii. complying with Australian Accounting Standards, the Corporations
Regulations 2001, professional reporting requirements and other mandatory
requirements,
b. there are reasonable grounds to believe that the Company will be able
to pay its debts as and when they become due and payable,
c. the financial statements and notes thereto are in accordance with
International Financial Reporting Standards issued by the International
Accounting Standards Board,
This declaration is made in accordance with a resolution of the Board of
Directors made pursuant to Section 303(5) of the Corporations Act 2001
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
PHILLIP DAY - Managing Director and CEO
Dated at Tyndrum, this 29th day of March, 2023
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